State pension sting ??????

Brown_D_Off

Hi,
Recently retired after 50. Yrs of work, bit miffed that only 35 counted towards pension 😂😂 however if that's the rule . Today after a number of long conversations about why I'm paying too much tax with. HMRC a jewel from them fell out, are you aware of this ?

It seems that they reduce your basic tax free amount , £11850 by your annual state pension amount, I deferred mine to try and increase it, so. Your tax code goes up. Unless I'm wrong I have calculated that this will increase my tax bill by £1511 per yr i.e. Basic tax free allowance V revised code after deducting state pension. Who knows about this, is it fair and what can I do 😅😅. Any thoughts greatly appreciated. It has made a hash of my financial plan.

Cheers.

antrobus

The state pension, basic or new, has always been taxable.

JoeEngland

Brown_D_Off wrote: »

Hi,
Recently retired after 50. Yrs of work, bit miffed that only 35 counted towards pension 😂😂 however if that's the rule . Today after a number of long conversations about why I'm paying too much tax with. HMRC a jewel from them fell out, are you aware of this ?

It seems that they reduce your basic tax free amount , £11850 by your annual state pension amount, I deferred mine to try and increase it, so. Your tax code goes up. Unless I'm wrong I have calculated that this will increase my tax bill by £1511 per yr i.e. Basic tax free allowance V revised code after deducting state pension. Who knows about this, is it fair and what can I do 😅😅. Any thoughts greatly appreciated. It has made a hash of my financial plan.

Cheers.

I'd be more miffed if one needed 50 yrs NICs to get full state pension rather than 35!!

xylophone

The state pension is paid gross but counts as taxable income.

When did you become eligible for state pension?

https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/how-is-my-state-pension-taxed

Beenie

as others have said, the state pension has always been taxable. The more pension you get (by deferring for a few years) unfortunately means that it eats into ypur tax-free personal allowance, so any income earned or otherwise is also taxedif the total income exceeds that years allowance.

kidmugsy

JoeEngland wrote: »

I'd be more miffed if one needed 50 yrs NICs to get full state pension rather than 35!!

For most of my career men needed 44, women 39. There was a short (and presumably unaffordable) spell at 30, and then it went up to 35. Next it'll be 40?

Dazed_and_confused

I've checked with Deep Thought and it's actually going to be 42 years next!

Brynsam

Brown_D_Off wrote: »

Hi,
It seems that they reduce your basic tax free amount , £11850 by your annual state pension amount, I deferred mine to try and increase it, so. Your tax code goes up. Unless I'm wrong I have calculated that this will increase my tax bill by £1511 per yr i.e. Basic tax free allowance V revised code after deducting state pension. Who knows about this, is it fair and what can I do 😅😅. Any thoughts greatly appreciated. It has made a hash of my financial plan.

Is it fair? Well, the state pension has always counted towards taxable income, so hard to see how it can be a 'sting' when nothing has changed. OK, you deferred your state pension - but then you didn't pay tax on those years where your state pension was in deferral. Swings and roundabouts!

zagfles

kidmugsy wrote: »

For most of my career men needed 44, women 39. There was a short (and presumably unaffordable) spell at 30, and then it went up to 35. Next it'll be 40?

It was 30 for the BASIC state pension and about 49 for SERPS/S2P. The new state pension replaces both and 35 is the approx weighted average.

TcpnT

Who knows about this, is it fair and what can I do ����. Any thoughts greatly appreciated. It has made a hash of my financial plan.

Anyone who has even even basic financial awareness or has done any retirement planning at all will know about this. As others have said the State Pension is taxable income and it's hardly reasonable to blame the government or HMRC for some kind of underhand plot to conceal this - the fault lies entirely with you.

If this most basic principle of income tax has caught you out you might be wise to work on improving your general financial knowledge because you may have made further incorrect assumptions that will end up costing you down the line.

p00hsticks

zagfles wrote: »

It was 30 for the BASIC state pension

Only between 2010 and 2016.

As kidmugsy says, prior to that it was 44 years for men and 39 for women